Tax sector: Prepare carefully to promote tax support policy effectively

Nguyen Thi Thu Ha, Deputy Director of Tax Declaration and Accounting Department – General Department of Taxation

What solutions have been prepared by the General Department of Taxation to support enterprises as well as business households?

The Covid-19 pandemic has impacted significantly on all businesses and business households. The most obvious effect is that the taxpayer did not gain revenue so the source of tax payment was very difficult. Facing this fact, the General Department of Taxation instructed localities to support taxpayers. Accordingly, tax authorities guided taxpayers to determine whether they were subject to difficulties due to force majeure (pandemic) or not, guiding taxpayers to make applications for the extension of tax payment for those cases which had been due or make dossiers to be considered for a tax penalty exemption of late payment.

As for individual business households (very vulnerable subjects), in case of revenue loss of 50% or more, the tax authority would consider, evaluate and adjust the presumptive tax rate for taxpayers, especially in months directly affected by the pandemic.

To help businesses and business households to overcome difficulties, the Government and the Ministry of Finance have issued many decisions related to taxes and fees. In particular, Decree No. 41/2020/ND-CP stipulating the extension of tax and land rent. Right after this decree was issued, what actions did the tax sector take to help businesses access this support package?

Decree 41 was issued by the Government in a timely manner, conveying the Government's support policy to the business community. The scope of this decree was very large with many taxes, many subjects and many tax payment periods. More than 90% of operating businesses would be subject to tax extension. Besides that, the decree also covered most industries and sectors that heavily affected by the Covid-19 pandemic, such as the textile industry, which is highly dependent on imported raw materials, so when the supply chain was "broken", their business was definitely affected; or the tourism industry was also greatly affected due to a sharp decline in the number of visitors to Vietnam.

Decree 41 extended the deadline of tax payment up to five months for organisations and enterprises subject to pay VAT in the tax period of March, April, May and June of 2020 (for the case where value added declaration by month) and tax period of quarters 1 and2 of 2020 (for the case of quarterly VAT declaration).

In particular, the decree also extended deadline of tax payment for corporate income tax arising in the tax finalisation period in 2019. Although 2019 was considered a prosperous business year and there were positive taxes, to have sources of liquidity in the first quarter of 2020, the Government has also issued an extension policy to facilitate businesses in using that source of money for maintaining their production and business.

To support businesses and taxpayers, tax authorities have also carefully prepared the problem of processing electronic dossiers. The application has been upgraded so taxpayers can submit in the fastest and most effective way.

So far, how many businesses and taxpayers have submitted dossiers for tax payment extensions?

The deadline for submitting dossiers for tax payment extension is July 30, 2020. Taxpayers would choose the submission time for both tax declaration and tax payment extension dossiers. The tax authority would handle synchronously both the amount of tax payment and the extension of the tax payment.

As of May 12, the tax authority had received 96,500 dossiers of tax payment extension. However, this was only the number of dossiers, the actual number of subjects extended was much larger because if the parent company has branches in many different areas subject to extension, those branches would also be extended tax.

Along with that, the total amount of tax and land rent accumulated by May 12was more than VND 27,000 billion.

Besides Decree 41, the Government also issued Resolution No. 42/NQ-CP on measures to support people facing difficulties caused by the Covid-19 pandemic, including supporting individual business households. Could you tell us how the tax sector has cooperated with agencies and departments to bring the Government's support policy to the right people?

Along with extending tax payment and land rent in Decree 41, Resolution 42 was about policies to support people facing difficulties due to the Covid-19 pandemic. This means the Government would transfer part of the State budget to taxpayers who are in difficulties.

For taxpayers who are business individuals, normally, when revenue was at VND 100 million/year, they would be subject to the group of taxpayers. However, the Covid-19 pandemic caused a revenue loss to less than VND 100 million per year. For this subject, the Resolution 42 has provided VND 1 million/month for each household (for three consecutive months).

To identify the right beneficiaries of this policy, the tax authorities have collaborated with local authorities and with the Tax Advisory Council to identify those who were seriously affected and no longer have financial capacity to operate their business. From there, they "filter" out exactly those who was entitled to the State budget, avoiding policy profiteering.

In addition, the tax authority also worked with the district People's Committee to review and list business households entitled to support policies, and send it to the provincial People's Committee to make a list of the State.

Could you tell us about support solutions on tax in the future?

By this time, the pandemic has been controlled quite well and is not continuing to affect the economy, but the repercussions were very large. Therefore, the tax sector would continue to implement Decree 41 and Resolution 42. We would continue to spread information to the business community and taxpayers so they would grap information and receive support policies from the Government.

At the same time, the tax sector will support more channels for submitting dossiers of extending tax payment in different forms. Recently, the General Department of Taxation integrated 93 tax administrative procedures on the National Online Public Service Portal. As a result, taxpayers could not only submit dossiers for extending tax payment at the tax portal, but also on the National Online Public Service Portal.

At this point, the tax sector would also assess the damage level of "post" the Covid-19 pandemic, consult with the Ministry of Finance and submit to the Government on support policies of the State such as: Considering adjusting tax reduction of the corporate income tax rate to about 15-17% for small and micro enterprises; tax reduction or exemption for two years with micro enterprises established from business households; raising the family income tax deduction level. Besides that, tax exemption policies of using non-agricultural land were also a very timely measure to support people for recovering production and business.